October 25, 2006

Oil
and politics blend in Knowles' resume

THIRD
TERM: Son of a wildcatter looks to return to Juneau.

By TOM KIZZIAS
Anchorage Daily News
First of two parts

With
grease stains from his early days in the oil fields and battle scars
from three decades in politics, Tony Knowles is presenting himself to
voters this year as the ideal candidate to build a new pipeline across
Alaska.

Tony
Knowles is

again
a candidate for

Governor
of Alaska.

Knowles
served in the

Army
from 1962 to 1965

and
worked with military

intelligence
in Vietnam.

Knowles
is telling voters about his childhood among Oklahoma oil prospectors as
he campaigns to get hisgovernor's
job back. He came to Alaska to work on a drilling rig in Cook Inlet.

"I
have a personal understanding at the grass-roots level of what the
industry means to people," he says.

That
insider knowledge, he says, coupled with his two terms as governor give
him the credibility and experience to negotiate with the oil industry
over construction of a natural gas pipeline from the North Slope. The
gas line is widely seen as having the potential to provide a big
construction boom, be a long-lasting source of state government revenue
and be a foundation of Alaska's future economy.

Critics
say Knowles, a Democrat, was too close to the oil industry and gave away
too much when he was governor. But Knowles is nevertheless choosing to
emphasize those personal ties, reminding voters that he was something
other than just a politician.

He has
less to say about his days as a two-term Anchorage mayor and a
restaurant owner, not to mention as an Ivy League classmate of George W.
Bush. But the oil-field pedigree is for real.

In fact,
according to old newspaper accounts, when the 63-year-old Knowles was
the first baby of the year born in his Oklahoma hometown, he was given
the title "Mr. Tulsa of 1943."

Call it
Mr. Tulsa against Miss Wasilla.

Knowles'
Republican rival, former Wasilla mayor (and pageant winner) Sarah Palin,
is turning up the heat under the other part of his resume: his eight
years as governor.

The
Juneau years between 1994 and 2002 were acrimonious ones, especially as
the sourness between Knowles and Senate leaders grew more personal. Up
against Republican-led legislatures every year, Knowles vetoed more
bills than any governor except Jay Hammond. No Alaska chief executive
ever had so many vetoes overridden.

There is
plenty of controversial material for opponents to mine from those years.
Subjects range from old standards like Knowles' income tax plan and his
subsistence efforts to the more complicated -- and for this campaign,
arguably more relevant -- questions about how tough a negotiator Knowles
was with the oil companies.

Knowles
tried to thrive as a centrist Democrat in a red state by declaring
Alaska "open and ready for business." Critics said some of the
incentives and lease changes he proposed went beyond what was necessary
to keep the companies working.

He had a
way of annoying his liberal base, dancing nervously away from labels
like "progressive" and, in one memorable episode, snubbing
Jimmy Carter when the former president came in 2000 to celebrate
Alaska's parks. On the other hand, liberals liked his social policies
and credit him with opening up jobs and commission seats to
environmentalists and others often shunned in Republican circles.

Knowles'
campaign strategy this time around has been to look ahead, offering
reams of position papers about education, health care and other issues
of the next four years. He's trying to contrast his preparedness to the
less-developed platforms of Palin, who wants to turn the discussion to
her opponent's past.

Knowles
offers a spirited defense of his old policies, but he also argues that
those were different times.

Oil
prices were low, the oil industry was skittish about making new
investments in Alaska, the gas line appeared to be uneconomic. The state
faced a huge budget gap every year. Addressing new taxes or tapping
Permanent Fund earnings was the responsible thing to do, Knowles says.

Today,
with oil prices high, the landscape looks different. The incentives he
offered to reverse the decline in North Slope oil production are no
longer so necessary, he says.

"This
is not a temporary blip," he says. "Clearly, Alaska is in the
driver's seat. It gives Alaska a lot more negotiating power and leverage
on developing the gas line."

As if to
underline the point of his greater independence, Knowles chose a tough
crowd of oil company employees at BP's Anchorage headquarters last July
to announce he was going to consider more than just the gas pipeline
deal their bosses had worked up with Gov. Frank Murkowski.

"I
think it's time for Alaskans -- and I speak to you as Alaskans -- it's
time for us to assert our sovereignty and say these are the terms by
which we want to see a gas line developed," Knowles said that day.

OIL UNDER HIS NAILS

"He
was always counting on the next well to be his big strike," Knowles
said in a recent interview.

His
mother, Ruth Sheldon Knowles, once told a reporter that the older
generations of Knowles men had tended to drill dry holes and "all
died broke."

Ruth
Sheldon Knowles was an expert on the type. A world-traveling oil
business journalist, consultant and author, she wrote a best-seller
called "The Greatest Gamblers: The Epic of American Oil
Exploration." She worked in Mexico, Indonesia and Venezuela, and
had just stepped down from a job with the Petroleum Administration for
War when Knowles was born in 1943.

When her
son was Anchorage mayor, she gave an interview to the Anchorage Times in
which she warned that environmentalism -- or "petrophobia," as
she called it -- threatened to cripple oil development. She died in
1996.

Tony
Knowles worked in the oil fields while he went through school and after
finishing college. He tells campaign audiences this helped build up his
grubstake to go into the restaurant business in Anchorage.

"People
have images of what you are. They might have forgotten that part of
him," says campaign manager Leslie Ridle. His familiarity with the
industry is significant, she says, because "he knows their
language, the way they work. He won't make the rookie blunders in
dealing with them."

On this
year's campaign trail, voters are more likely to hear from Knowles that
he was kicked out of school twice than that the school was Yale
University. In fact he followed his mother east after his parents
separated, and in ninth grade enrolled in an exclusive prep school,
"wearing a shiny suit on Sunday, and everybody else wears worsted
wool," as he once described it.

Knowles
says he developed a bad attitude toward authority and was asked to leave
Yale, where his father and grandfather had gone. Bad grades and a stunt
with water balloons were factors.

A
college friend, Bill Greenwood, said in a 1984 interview that financial
reversals hit the Knowles family just as Tony got to the university.

"I've
watched him in debate as a young man just destroy some pretty bright
characters," Greenwood said. "In those days, he was kind of a
William F. Buckley-type conservative. He comes across like this Oklahoma
country boy. And he is an Oklahoma country boy. Except he's an extremely
bright Oklahoma country boy."

Knowles
says he only got straightened out after enlisting in the 82nd Airborne,
which including a year working intelligence in Vietnam.

"After
getting kicked out of school, only the Army would put you in
intelligence," is a favorite Knowles line.

He
returned to school and graduated in 1968 with an economics degree from
Yale, where his fraternity president at Delta Kappa Epsilon was George
W. Bush.

"I
don't know whether your governor has admitted it or not, but he went to
Yale," President Bush said in a speech at Elmendorf in 2002,
drawing laughter from the crowd and from Knowles. "He probably
slurs his words so it sounds like 'jail.' "

Despite
his slow academic start, Knowles has through the years been called an
engaged, detail-oriented administrator. Ridle, who has run his campaigns
since 1994, says he enjoys hashing out the fine points of policy, like
his one-time protege, Anchorage Mayor Mark Begich.

"He
thinks the gas line is the most exciting thing in 30 years, and he says
working on it would be fun," she says.

STEPPING INTO POLITICS

After
graduation, Knowles had a job on a platform off the California coast
when he got an offer of drilling work in Alaska. He quickly asked his
college girlfriend, Vassar student Susan Morris, to marry him.

"She
said, 'Yes; where are we going?' We headed to Alaska," Knowles
said.

In a
year, he had quit the oil field and opened his first Grizzly Burger, on
Northern Lights Boulevard in Anchorage.

Knowles
got his first taste of public policy when he was appointed to a
committee drawing up a comprehensive plan for Anchorage. In 1975 he ran
for a seat on the Anchorage Assembly and was elected by 30 votes. The
one-time backer of Barry Goldwater was now one of the city's liberals,
advocating for quality-of-life issues in a town growing helter-skelter
during the pipeline boom.

His
attention to trails and greenbelts as well as roads and police got
Knowles elected mayor in 1981. He came from behind in that race to win a
runoff against conservative House Speaker Joe Hayes, his one-time
partner in Grizzly Burger and today one of Juneau's biggest lobbyists.

Not
unlike his opponent from Wasilla, Knowles took over a city exploding
with growth and devoted his efforts -- and the city's budget -- to
catching up on everything from roads and traffic lights to unseen
necessities like the Eklutna water pipeline and a new landfill.

The face
of Anchorage was remade during Knowles' two terms as mayor. The city
built and opened major state-funded civic landmarks such as the Sullivan
Arena, the Egan Civic & Convention Center and the Loussac Library,
many of them drawn up under his predecessor, 14-year Mayor George
Sullivan. Knowles also built the coastal trail that was later named for
him.

As
mayor, he also promoted many women to executive city positions,
supported gay rights and promoted mass transit. He had to handle 3,000
employees and a $200 million budget.

Knowles
took much of the blame for big cost overruns at the Alaska Center for
the Performing Arts, whose price tag rose from $45 million to $72
million. Critics said the mayor rode roughshod to clear away blocks of
seedy-looking bars in downtown and build parking edifices. And when oil
prices and state spending plummeted in the middle of his six-year run,
Knowles and the Assembly began to spar over spending. Together they
reduced the city budget by more than 10 percent.

His
opponents said Knowles could be overly concerned with his image -- they
gave him the nickname "Mayor Slick." He could turn on the
charm but also be remarkably thin-skinned about criticism. He became
less off-the-cuff, at times almost strangled, in talking to reporters.

Press
accounts at the time say he learned consensus-building to get what he
needed from the Assembly. He issued seven vetoes in six years and none
of them was overridden. By contrast, his successor, Tom Fink, had more
than a dozen vetoes overturned in his first three years.

Knowles'
closest political adviser through those years, according to people who
know him best, was his wife, Susan. She served an 18-year career as a
commissioner on the old Alaska Public Utilities Commission, stepping
down before Knowles became governor and raising three children. Susan
Knowles continues to play a central role in his career: for example,
making final decisions on campaign ads and other matters when her
husband is out of town.

He
finished his mayoral stint in 1988 and went back to running his one
remaining restaurant, the Downtown Deli, which he co-owned with Dave
Rose, longtime executive director of the Alaska Permanent Fund. The
former mayor stayed busy busing dishes in a white apron.